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Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
2 Stocks to Add to Your Watchlist
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.
The final step today is to look at a stock that meets our ESP qualifications. Novavax (NVAX) earns a Zacks Rank #3 29 days from its next quarterly earnings release on May 9, 2025, and its Most Accurate Estimate comes in at $1.13 a share.
Novavax's Earnings ESP sits at 492.11%, which, as explained above, is calculated by taking the percentage difference between the $1.13 Most Accurate Estimate and the Zacks Consensus Estimate of $0.19.
NVAX is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is United Therapeutics (UTHR).
United Therapeutics is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 7, 2025. UTHR's Most Accurate Estimate sits at $6.48 a share 27 days from its next earnings release.
For United Therapeutics, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $6.29 is 3.07%.
Because both stocks hold a positive Earnings ESP, NVAX and UTHR could potentially post earnings beats in their next reports.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
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